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Sega and Nintendo are planning a joint venture, according to Japanese newspaper Asahi.

That's all the paper says - it's appended to a report on Sega's financial woes, which we covered last week - and doesn't go into details about what the JV will entail.

It's not hard to figure out, however. Sega's chairman, Isao Okawa, first mooted a shift away from the console market late last year in some off-the-cuff remarks at a non-Sega event. He suggested that the company might well seek its fortune away from the hardware business by focusing on software and services.

He even went as far as suggesting the Dreamcast might be the company's last console.

"I will say that the future doesn't necessarily lie in the hardware business," said Okawa. "I think in the future there is the possibility of Sega becoming a software-only company... Even if Dreamcast does sell, we will make that shift."

Sega has since said officially that it's not focusing solely on Dreamcast. Cutting the console's price in a desperate attempt to boost sales before the PlayStation 2 arrived in the US and Europe will now mean Sega posts a loss of ¥22.1 billion for the year to April 2001, well down on the ¥1.5 billion profit it originally expected.

Focusing on software essentially means supporting other platforms, a plan that has also been hinted at by Sega insiders over the last year or so. The tie-in with its one-time arch-rival, Nintendo, could well be the first part of that scheme. Instead of developing a console better capable of competing with PlayStation 2, Microsoft's upcoming X-box and Nintendo's GameCube, Sega pitches in with Nintendo and ports some of its hotter software properties over to GameCube.

That might even signal a merger between the two companies. We shall see. ®